Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 28, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | TALKSPACE, INC. | |
Entity Central Index Key | 0001803901 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 166,510,245 | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity File Number | 001-39314 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-4636604 | |
Entity Address, Address Line One | 622 Third Avenue | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10017 | |
City Area Code | 212 | |
Local Phone Number | 284-7206 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Common stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Trading Symbol | TALK | |
Security Exchange Name | NASDAQ | |
Warrant | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | TALKW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 126,104 | $ 138,545 |
Accounts receivable, net | 8,420 | 9,640 |
Other current assets | 2,920 | 4,372 |
Total current assets | 137,444 | 152,557 |
Property and equipment, net | 456 | 677 |
Intangible assets, net | 2,157 | 2,529 |
Other long-term assets | 464 | 491 |
Total assets | 140,521 | 156,254 |
CURRENT LIABILITIES: | ||
Accounts payable | 5,484 | 6,461 |
Deferred revenues | 3,683 | 4,355 |
Accrued expenses and other current liabilities | 10,444 | 16,502 |
Total current liabilities | 19,611 | 27,318 |
Warrant liabilities | 820 | 939 |
Other long-term liabilities | 295 | 461 |
Total liabilities | 20,726 | 28,718 |
Commitments and contingencies (Note 5) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock of $0.0001 par value - Authorized: 1,000,000,000 shares at June 30, 2023 and December 31, 2022; Issued and outstanding: 166,204,295 and 161,155,030 shares at June 30, 2023 and December 31, 2022, respectively | 16 | 16 |
Additional paid-in capital | 384,443 | 378,722 |
Accumulated deficit | (264,664) | (251,202) |
Total stockholders' equity | 119,795 | 127,536 |
Total liabilities and stockholders' equity | $ 140,521 | $ 156,254 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 166,204,295 | 161,155,030 |
Common stock, shares outstanding | 166,204,295 | 161,155,030 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues | $ 35,645 | $ 29,844 | $ 68,981 | $ 59,994 |
Cost of revenues | 17,833 | 15,297 | 34,421 | 30,426 |
Gross profit | 17,812 | 14,547 | 34,560 | 29,568 |
Operating expenses: | ||||
Research and development, net | 4,171 | 5,576 | 9,524 | 10,611 |
Clinical operations, net | 1,675 | 2,316 | 3,276 | 4,092 |
Sales and marketing | 13,045 | 18,931 | 26,514 | 40,339 |
General and administrative | 5,329 | 8,792 | 10,693 | 16,802 |
Total operating expenses | 24,220 | 35,615 | 50,007 | 71,844 |
Operating loss | (6,408) | (21,068) | (15,447) | (42,276) |
Financial (income) expense, net | (1,712) | 1,865 | (2,136) | 996 |
Loss before taxes on income | (4,696) | (22,933) | (13,311) | (43,272) |
Taxes on income | 8 | 89 | 151 | 110 |
Net loss | $ (4,704) | $ (23,022) | $ (13,462) | $ (43,382) |
Net loss per share: | ||||
Net loss per share: Basic | $ (0.03) | $ (0.15) | $ (0.08) | $ (0.28) |
Net loss per share: Diluted | $ (0.03) | $ (0.15) | $ (0.08) | $ (0.28) |
Weighted average number of common shares used in computing basic and diluted net loss per share: | ||||
Basic | 164,195,697 | 155,709,901 | 163,003,363 | 154,901,165 |
Diluted | 164,195,697 | 155,709,901 | 163,003,363 | 154,901,165 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands | Total | Common stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance, value at Dec. 31, 2021 | $ 192,273 | $ 15 | $ 363,788 | $ (171,530) |
Beginning balance, shares at Dec. 31, 2021 | 152,862,447 | |||
Exercise of stock options | 2,063 | 2,063 | ||
Exercise of stock options, share | 2,164,870 | |||
Restricted Stock Units Vested | (67) | (67) | ||
Restricted Stock Units Vested Shares | 77,338 | |||
Stock-based compensation | 2,368 | 2,368 | ||
Net loss | (20,360) | (20,360) | ||
Ending balance, value at Mar. 31, 2022 | 176,277 | $ 15 | 368,152 | (191,890) |
Ending balance, shares at Mar. 31, 2022 | 155,104,655 | |||
Beginning balance, value at Dec. 31, 2021 | 192,273 | $ 15 | 363,788 | (171,530) |
Beginning balance, shares at Dec. 31, 2021 | 152,862,447 | |||
Net loss | (43,382) | |||
Ending balance, value at Jun. 30, 2022 | 157,254 | $ 15 | 372,151 | (214,912) |
Ending balance, shares at Jun. 30, 2022 | 157,372,616 | |||
Beginning balance, value at Mar. 31, 2022 | 176,277 | $ 15 | 368,152 | (191,890) |
Beginning balance, shares at Mar. 31, 2022 | 155,104,655 | |||
Exercise of stock options | 286 | 286 | ||
Exercise of stock options, share | 1,092,515 | |||
Restricted Stock Units Vested | (126) | (126) | ||
Restricted Stock Units Vested Shares | 1,175,446 | |||
Stock-based compensation | 3,839 | 3,839 | ||
Net loss | (23,022) | (23,022) | ||
Ending balance, value at Jun. 30, 2022 | 157,254 | $ 15 | 372,151 | (214,912) |
Ending balance, shares at Jun. 30, 2022 | 157,372,616 | |||
Beginning balance, value at Dec. 31, 2022 | $ 127,536 | $ 16 | 378,722 | (251,202) |
Beginning balance, shares at Dec. 31, 2022 | 161,155,030 | 161,155,030 | ||
Exercise of stock options | $ 621 | 621 | ||
Exercise of stock options, share | 1,739,265 | |||
Restricted Stock Units Vested | (65) | (65) | ||
Restricted Stock Units Vested Shares | 225,050 | |||
Stock-based compensation | 2,303 | 2,303 | ||
Net loss | (8,758) | (8,758) | ||
Ending balance, value at Mar. 31, 2023 | 121,637 | $ 16 | 381,581 | (259,960) |
Ending balance, shares at Mar. 31, 2023 | 163,119,345 | |||
Beginning balance, value at Dec. 31, 2022 | $ 127,536 | $ 16 | 378,722 | (251,202) |
Beginning balance, shares at Dec. 31, 2022 | 161,155,030 | 161,155,030 | ||
Net loss | $ (13,462) | |||
Ending balance, value at Jun. 30, 2023 | $ 119,795 | $ 16 | 384,443 | (264,664) |
Ending balance, shares at Jun. 30, 2023 | 166,204,295 | 166,204,295 | ||
Beginning balance, value at Mar. 31, 2023 | $ 121,637 | $ 16 | 381,581 | (259,960) |
Beginning balance, shares at Mar. 31, 2023 | 163,119,345 | |||
Exercise of stock options | 869 | 869 | ||
Exercise of stock options, share | 1,837,734 | |||
Restricted Stock Units Vested | (136) | (136) | ||
Restricted Stock Units Vested Shares | 1,247,216 | |||
Stock-based compensation | 2,129 | 2,129 | ||
Net loss | (4,704) | (4,704) | ||
Ending balance, value at Jun. 30, 2023 | $ 119,795 | $ 16 | $ 384,443 | $ (264,664) |
Ending balance, shares at Jun. 30, 2023 | 166,204,295 | 166,204,295 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (13,462) | $ (43,382) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 608 | 697 |
Stock-based compensation | 4,432 | 6,207 |
Remeasurement of warrant liabilities | (119) | 1,217 |
Decrease (increase) in accounts receivable | 1,220 | (1,650) |
Decrease in other current assets | 1,452 | 5,622 |
(Decrease) increase in accounts payable | (977) | 381 |
Decrease in deferred revenues | (672) | (1,236) |
Decrease in accrued expenses and other current liabilities | (6,058) | (1,145) |
Other | (172) | 178 |
Net cash used in operating activities | (13,748) | (33,111) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (10) | (160) |
Proceeds from sale of property and equipment | 28 | 0 |
Net cash provided by (used in) investing activities | 18 | (160) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 1,490 | 2,349 |
Payments for employee taxes withheld related to vested stock-based awards | (201) | (67) |
(Payments) proceeds from reverse capitalization, net of transaction costs | 0 | (645) |
Net cash provided by financing activities | 1,289 | 1,637 |
Net decrease in cash and cash equivalents | (12,441) | (31,634) |
Cash and cash equivalents at the beginning of the period | 138,545 | 198,256 |
Cash and cash equivalents at the end of the period | 126,104 | 166,622 |
Supplemental cash flow data: | ||
Cash paid during the period for income taxes | $ 176 | $ 97 |
Description of Organization and
Description of Organization and Business Operations | 6 Months Ended |
Jun. 30, 2023 | |
Description Of Organisation And Business Operation [Abstract] | |
Description of organization and business operations | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Talkspace, Inc. (together with its consolidated subsidiaries, the “Company” or “Talkspace”) is a leading behavioral healthcare company enabled by a purpose-built technology platform. Talkspace provides individuals and licensed therapists, psychologists and psychiatrists with an online platform for one-on-one therapy delivered via messaging, audio and video. The Company offers convenient and affordable access to a fully credentialed network of highly qualified providers. Since its inception, the Company has connected millions of patients with licensed behavioral health providers across a wide and growing spectrum of care through virtual counseling, psychotherapy, and psychiatry. The Company's principal executive office is located in New York, NY. The Company has three wholly owned subsidiaries, Talkspace LLC, Talkspace Network LLC and Groop Internet Platform LTD. In addition, the Company holds a variable interest in one professional association and six professional corporations, which have been established pursuant to the requirements of their respective domestic jurisdiction governing the corporate practice of medicine. See Note 10, “Variable Interest Entities,” in these notes to the condensed consolidated financial statements for further details. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These condensed consolidated financial statements should be read in conjuction with the consolidated financial statements as of and for the year ended December 31, 2022 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2022, have been applied consistently in these unaudited condensed consolidated financial statements, unless otherwise stated. Intercompany transactions and balances have been eliminated in the preparation of the condensed consolidated financial statements. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the condensed consolidated financial statements. The Company’s significant estimates and assumptions used in these condensed consolidated financial statements include, but are not limited to, the recognition and disclosure of contingent liabilities, revenue recognition, stock-based compensation awards and the fair value of warrant liabilities. The Company bases its estimates on historical factors, current circumstances and the experience and judgment of management. The Company evaluates its assumptions on an ongoing basis. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based on information available at the time they are made. Estimates, by their nature, are based on judgment and available information, therefore, actual results could be materially different from these estimates. Reclassification Certain prior year amounts have been reclassified to conform to current year presentation . Recently Issued and Adopted Accounting Pronouncements The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on the condensed consolidated financial statements as a result of their future adoption. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | NOTE 3. REVENUE RECOGNITION The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”, when the Company satisfies its performance obligation to perform its defined contractual obligations to provide virtual behavioral healthcare services. Revenue is recognized in an amount that reflects the consideration that the Company will be entitled in exchange for the service rendered. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that is included in the transaction price. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Through its platform, Talkspace serves its business-to-business (“B2B”) channel, comprised of large health insurance plans and employee assistance programs (“Payors”), and large enterprise clients (“DTE”) who offer their insured members and employees access to the Company's platform at in-network reimbursement rates, or while their employer is under an active contract with Talkspace, where applicable, and its business-to-consumer (“Consumer”) channel, comprised of individual consumers who subscribe directly to the Company's platform. The Company contracts with Payors to provide its therapy and psychiatry services to their eligible covered members. Revenue is recognized at a point in time, as virtual therapy or psychiatry session is rendered. The transaction price is determined based on contracted rates and includes variable consideration in the form of implicit price concessions. The Company determines the total transaction price, including an estimate of variable consideration, at contract inception and reassesses this estimate at each reporting date. The Company estimates the amount of variable consideration that is included in the transaction price primarily based on historical collection experience for each insurance payor. Revenue from Payors is presented net of implicit price concessions. Contracts with Payors include annual evergreen clauses and generally may be terminated by either party typically upon a minimum 60-day advance notice. The Company contracts with enterprises to provide access to its therapist platform for their employees, primarily based on a per-member-per-month access fee model. Revenues from access fees are recognized ratably over the contractual term. The majority of contracts with enterprise clients typically range in length from one to three years and are generally non-cancelable during the initial contractual term. The Company also generates revenues from the sale of monthly, quarterly, bi-annual and annual membership subscriptions to the Company's therapy platform as well as supplementary a la carte offerings directly to individual consumers through a subscription plan. The Company recognizes consumer revenues ratably over the subscription period, beginning when therapy services commence. The Company recognizes revenues from supplementary a la carte offerings at a point in time, as virtual therapy session is rendered. Members may cancel their subscription at any time and will receive a pro-rata refund for the subscription price. The transaction price from member subscription revenue and supplementary a la carte offerings includes variable consideration in the form of refunds. The Company estimates the refund liability for the variable consideration portion of the transaction price primarily based on historical experience. The refund liability is recorded within the “Accrued expenses and other current liabilities” line item in the condensed consolidated balance sheets. Revenue from individual consumers is presented net of refunds. The following table presents the Company’s revenues from sales to unaffiliated customers disaggregated by revenue source: Unaudited Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Revenues from sales to unaffiliated customers: Payor revenue $ 18,539 $ 7,880 $ 33,350 $ 15,990 DTE revenue 8,039 6,685 16,715 12,346 Total B2B revenue 26,578 14,565 50,065 28,336 Consumer revenue 9,067 15,279 18,916 31,658 Total revenue $ 35,645 $ 29,844 $ 68,981 $ 59,994 Accounts Receivable and Allowance for Credit Losses Accounts receivables are stated net of credit losses allowance. The Company is exposed to credit losses primarily through its contracts with health insurance plans, employee assistance programs and enterprise clients. The Company’s methodology for estimating credit loss is based on historical collection experience, customer creditworthiness, current and future economic condition and market condition. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Accounts receivables are written off after all reasonable means to collect the full amount have been exhausted. The allowance for credit losses was immaterial as of June 30, 2023 and December 31, 2022. Deferred Revenue The Company records deferred revenues when cash payments from customers are received in advance of the Company's performance obligation to provide services. As of June 30, 2023, deferred revenue related mainly to the Company’s consumer channel. The Company expects to satisfy the majority of its p erformance obligations associated with deferred revenue within one year or less. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 4. FAIR VALUE MEASUREMENT The carrying value of the Company’s cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the relatively short-term nature of the underlying assets. The Company’s Private Placement Warrants are carried at fair value with changes in fair value recognized in earnings each period. The Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying condensed consolidated balance sheets. The warrant liabilities were measured at fair value at inception and thereafter on a recurring, quarterly basis, with changes in fair value presented within financial (income) expense, net, in the condensed consolidated statement of operations. The Private Placement Warrants were valued using the Black-Scholes-Merton Model, which is considered to be a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the implied volatility from the trading prices of the Public Warrants. The following table presents the changes in the fair value of warrant liabilities during the three and six months ended June 30, 2023 and 2022: Level 3 Liabilities (unaudited) For the Three Months Ended June 30, 2023 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 1,128 $ ( 308 ) $ 820 For the Six Months Ended June 30, 2023 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 939 $ ( 119 ) $ 820 Level 3 Liabilities (unaudited) For the Three Months Ended June 30, 2022 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 3,195 $ 2,092 $ 5,287 For the Six Months Ended June 30, 2022 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 4,070 $ 1,217 $ 5,287 |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | NOTE 5. COMMITMENTS AND CONTINGENT LIABILITIES Litigation In January 2022, the Company and certain of its current and former officers and directors were named as defendants in securities class action complaints filed in the United States District Court for the Southern District of New York under the case headings: (1) Baron v. Talkspace et al., No. 22-cv-00163 (S.D.N.Y.) and (2) Valdez v. Talkspace et al., No. 22-cv-00840 (S.D.N.Y.), which were subsequently consolidated under the caption In re Talkspace, Inc. Securities Litigation , No. 22-cv-00163 (S.D.N.Y) (the “Securities Action”). The Securities Action asserts violations of sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and SEC Rules 10b-5 and 14a-9 promulgated thereunder. These actions generally relate to public disclosures and statements by the Company in connection with its merger with Hudson Executive Investment Corp. (“HEIC”). In December 2022, the Company’s subsidiary Tailwind Merger Sub II, LLC, certain of the Company’s current and former directors and officers, and others were named as defendants in a putative class action complaint filed in the Delaware Court of Chancery under the case caption Valdez v. Braunstein, et al., C.A. No. 2022-1148 (Del. Ch.) (the “Delaware Action”). The Delaware Action asserts claims for breach of fiduciary duty and aiding and abetting breach of fiduciary duty relating to the merger with HEIC, among other things, based on many of the same facts at issue in the Securities Action. The complaint seeks, among other things damages on behalf of putative class members who did not redeem their shares in connection with the Company’s merger with HEIC. In February 2023, the Company resolved the Securities Action and the Delaware Action through mediation. The settlement resolves these litigations with respect to all named defendants. The settlement will have to be approved by the court, which the Company expects will occur in the third quarter of 2023. In June and July 2022, two individuals filed stockholder derivative lawsuits on behalf of Talkspace in the United States District Court for the Southern District of New York under the case captions: (1) Odsvall v. Oren Frank et al., No. 22-cv-05016 (S.D.N.Y.) and (2) Nayman v. Berg, et al., No. 22-cv-06258 (S.D.N.Y.), which were subsequently consolidated under the caption In re Talkspace Stockholder Derivative Litigation , No. 22-cv-05016 (S.D.N.Y.) in September 2022 (the “Derivative Action”). The Derivative Action named certain of the Company’s current and former officers and directors as defendants and the Company as a nominal defendant. The Derivative Action asserted claims for violations of federal securities laws, breach of fiduciary duty, and aiding and abetting breaches of fiduciary duty relating to the merger with HEIC, among other things, based on many of the same facts at issue in the Securities Action. In February 2023 the parties reached an agreement in principle to resolve the Derivative Action with respect to all named defendants in exchange for certain changes to the Company’s Corporate Governance environment, including the declassification of the Company’s board of directors, creation of a management-level disclosure committee, enhancements to the responsibilities and duties of the Company’s Audit Committee, the addition of independent directors, enhancements to employee compliance training and retention of an internal controls consultant. In addition, the Company agreed to pay or cause to be paid $ 550,000 in attorney’s fees and expenses. On May 18, 2023, the parties entered into a Stipulation of Settlement and Release Agreement (the “Stipulation”) that sets forth the terms and conditions for the proposed settlement and dismissal with prejudice of the Derivative Action (the “Settlement”). On June 30, 2023, the court entered an order preliminarily approving the Stipulation and proposed Settlement of the Derivative Action and scheduling a hearing for August 16, 2023 to determine whether to give final approval to the Settlement. The defendants have not admitted any liability or wrongdoing in connection with the Settlement and have entered into the Settlement solely to avoid the costs, risks, distraction, and uncertainties of continued litigation of the Derivative Action. In addition to the foregoing, the Company may in the future be involved in various legal proceedings, claims and litigation that arise in the normal course of business. The Company accrues for estimated loss contingencies related to legal matters when available information indicates that it is probable a liability had been incurred and the Company can reasonably estimate the amount of that loss. In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. In addition, even where a loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is often not possible to reasonably estimate the size of the possible loss or range of loss or possible additional losses or range of additional losses. Warranties and Indemnification The Company’s arrangements generally include certain provisions for indemnifying clients against liabilities if there is a breach of a client’s data or if the Company’s service infringes a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as a director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer liability insurance coverage that would generally enable it to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. |
Capital Stock
Capital Stock | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | NOTE 6. CAPITAL STOCK As of June 30, 2023 and December 31, 2022 there were outstanding 12,780,000 Private Placement Warrants and 21,350,000 Public Warrants to purchase the Company’s common stock at an exercise price of $ 11.50 per share. As of June 30, 2023 and December 31, 2022 , no shares of preferred stock were issued or outstanding. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | NOTE 7. SHARE-BASED COMPENSATION In June 2021, the Company adopted the 2021 Incentive Award Plan (the “2021 Plan”) under which the Company may grant cash and equity incentive awards to officers, employees, directors, consultants and service providers in order to attract, motivate and retain the talent. In June 2021, the Company also adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) under which employees of the Company and its participating subsidiaries are provided with the opportunity to purchase Talkspace common stock at a discount through accumulated payroll deductions during successive offering periods. As of June 30, 2023, no employee stock purchases have been made under the 2021 ESPP. All stock-based awards are measured based on the grant date fair value and are generally recognized on a straight-line basis in the Company’s condensed consolidated statement of operations over the period during which the employee is required to perform services in exchange for the award (generally requiring a four-year vesting period). The following table sets forth the total stock-based compensation expense related to stock options and restricted stock units included in the respective components of operating expenses in the condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, Unaudited 2023 2022 2023 2022 (in thousands) Research and development, net $ 546 $ 662 $ 1,220 $ 1,208 Clinical operations, net 126 79 246 201 Sales and marketing 445 816 836 1,593 General and administrative 1,012 2,282 2,130 3,205 Total stock-based compensation expense $ 2,129 $ 3,839 $ 4,432 $ 6,207 |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NOTE 8. NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented: Three Months Ended June 30, Six Months Ended June 30, Unaudited 2023 2022 2023 2022 (in thousands, except share and per share data) Net loss $ ( 4,704 ) $ ( 23,022 ) $ ( 13,462 ) $ ( 43,382 ) Weighted-average shares used to compute net loss per share: Basic and Diluted 164,195,697 155,709,901 163,003,363 154,901,165 Net loss per share: Basic and Diluted $ ( 0.03 ) $ ( 0.15 ) $ ( 0.08 ) $ ( 0.28 ) For the three and six months ended June 30, 2023 , the following were excluded from the calculation of diluted net loss per share since each would have had an anti-dilutive effect given the Company's net loss: 12,365,441 non-vested stock options, 10,179,411 non-vested restricted stock units, 12,780,000 Private Placement Warrants and 21,350,000 Public Warrants to purchase the Company’s common stock. For the three and six months ended June 30, 2022 , the following were excluded from the calculation of diluted income per share since each would have had an anti-dilutive effect given the Company's net loss: 18,042,701 non-vested stock options, 6,360,148 non-vested r estricted stock units, 12,780,000 Private Placement Warrants and 21,350,000 Public Warrants to purchase the Company’s common stock. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses and Other Current Liabilities Abstract | |
Accrued Expenses and Other Current Liabilities | NOTE 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following table presents the amounts included within a ccrued expenses and other current liabilities as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 (in thousands) Unaudited Employee compensation $ 3,821 $ 5,290 User acquisition 1,913 2,256 Litigation costs 750 5,500 Professional fees 576 543 Other 3,384 2,913 Accrued expenses and other current liabilities $ 10,444 $ 16,502 |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
VARIABLE INTEREST ENTITIES ("VIEs") | NOTE 10. VARIABLE INTEREST ENTITIES ("VIEs" ) The Company holds a variable interest in Talkspace Provider Network, PA (“TPN”) and certain affiliated professional entities (“PC entities”). TPN and the PC entities are VIEs. Under the provisions of ASC 810, “Consolidation”, an entity consolidates a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company has determined that it is able to direct the activities of TPN and the PC entities that most significantly impact their economic performance and it funds and absorbs all losses of these VIEs resulting in the Company being the primary beneficiary of these entities. Accordingly, the Company consolidates these VIEs. The following table details the assets and liabilities of the Company's consolidated VIEs as of June 30, 2023 and December 31, 2022. The assets and liabilities in the table below are presented prior to consolidation and thus a portion of these assets and liabilities are eliminated in consolidation. (in thousands) June 30, 2023 December 31, 2022 ASSETS Unaudited Cash and cash equivalents $ 497 $ 883 Accounts receivable 6,159 1,716 Other assets — 4,813 Total Assets $ 6,656 $ 7,412 LIABILITIES Accrued expenses and other current liabilities 3,802 3,758 Total Liabilities $ 3,802 $ 3,758 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These condensed consolidated financial statements should be read in conjuction with the consolidated financial statements as of and for the year ended December 31, 2022 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2022, have been applied consistently in these unaudited condensed consolidated financial statements, unless otherwise stated. Intercompany transactions and balances have been eliminated in the preparation of the condensed consolidated financial statements. |
Reclassifications | Reclassification Certain prior year amounts have been reclassified to conform to current year presentation |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the condensed consolidated financial statements. The Company’s significant estimates and assumptions used in these condensed consolidated financial statements include, but are not limited to, the recognition and disclosure of contingent liabilities, revenue recognition, stock-based compensation awards and the fair value of warrant liabilities. The Company bases its estimates on historical factors, current circumstances and the experience and judgment of management. The Company evaluates its assumptions on an ongoing basis. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based on information available at the time they are made. Estimates, by their nature, are based on judgment and available information, therefore, actual results could be materially different from these estimates. |
Recently Issued and Adopted Accounting Pronouncements | Recently Issued and Adopted Accounting Pronouncements The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on the condensed consolidated financial statements as a result of their future adoption. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue by Revenue Source | Unaudited Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2023 2022 2023 2022 Revenues from sales to unaffiliated customers: Payor revenue $ 18,539 $ 7,880 $ 33,350 $ 15,990 DTE revenue 8,039 6,685 16,715 12,346 Total B2B revenue 26,578 14,565 50,065 28,336 Consumer revenue 9,067 15,279 18,916 31,658 Total revenue $ 35,645 $ 29,844 $ 68,981 $ 59,994 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of warrants | The following table presents the changes in the fair value of warrant liabilities during the three and six months ended June 30, 2023 and 2022: Level 3 Liabilities (unaudited) For the Three Months Ended June 30, 2023 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 1,128 $ ( 308 ) $ 820 For the Six Months Ended June 30, 2023 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 939 $ ( 119 ) $ 820 Level 3 Liabilities (unaudited) For the Three Months Ended June 30, 2022 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 3,195 $ 2,092 $ 5,287 For the Six Months Ended June 30, 2022 (in thousands) Beginning Balance Change in Fair Value Ending Balance Private Placement Warrants $ 4,070 $ 1,217 $ 5,287 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock-Based Compensation Expense | The following table sets forth the total stock-based compensation expense related to stock options and restricted stock units included in the respective components of operating expenses in the condensed consolidated statements of operations: Three Months Ended June 30, Six Months Ended June 30, Unaudited 2023 2022 2023 2022 (in thousands) Research and development, net $ 546 $ 662 $ 1,220 $ 1,208 Clinical operations, net 126 79 246 201 Sales and marketing 445 816 836 1,593 General and administrative 1,012 2,282 2,130 3,205 Total stock-based compensation expense $ 2,129 $ 3,839 $ 4,432 $ 6,207 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Income (Loss) Per Share Attributable to Common Stockholders | The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented: Three Months Ended June 30, Six Months Ended June 30, Unaudited 2023 2022 2023 2022 (in thousands, except share and per share data) Net loss $ ( 4,704 ) $ ( 23,022 ) $ ( 13,462 ) $ ( 43,382 ) Weighted-average shares used to compute net loss per share: Basic and Diluted 164,195,697 155,709,901 163,003,363 154,901,165 Net loss per share: Basic and Diluted $ ( 0.03 ) $ ( 0.15 ) $ ( 0.08 ) $ ( 0.28 ) |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses and Other Current Liabilities Abstract | |
Schedule of accrued expenses and other current liabilities | ccrued expenses and other current liabilities as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 (in thousands) Unaudited Employee compensation $ 3,821 $ 5,290 User acquisition 1,913 2,256 Litigation costs 750 5,500 Professional fees 576 543 Other 3,384 2,913 Accrued expenses and other current liabilities $ 10,444 $ 16,502 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Assets and liabilities of the Company's consolidated VIE | The following table details the assets and liabilities of the Company's consolidated VIEs as of June 30, 2023 and December 31, 2022. The assets and liabilities in the table below are presented prior to consolidation and thus a portion of these assets and liabilities are eliminated in consolidation. (in thousands) June 30, 2023 December 31, 2022 ASSETS Unaudited Cash and cash equivalents $ 497 $ 883 Accounts receivable 6,159 1,716 Other assets — 4,813 Total Assets $ 6,656 $ 7,412 LIABILITIES Accrued expenses and other current liabilities 3,802 3,758 Total Liabilities $ 3,802 $ 3,758 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue by Revenue Source (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues fom sales to unaffiliated customers: | ||||
Total Revenue | $ 35,645 | $ 29,844 | $ 68,981 | $ 59,994 |
Payor Revenue | ||||
Revenues fom sales to unaffiliated customers: | ||||
Total Revenue | 18,539 | 7,880 | 33,350 | 15,990 |
DTE revenue | ||||
Revenues fom sales to unaffiliated customers: | ||||
Total Revenue | 8,039 | 6,685 | 16,715 | 12,346 |
B2B Revenue | ||||
Revenues fom sales to unaffiliated customers: | ||||
Total Revenue | 26,578 | 14,565 | 50,065 | 28,336 |
Consumer | ||||
Revenues fom sales to unaffiliated customers: | ||||
Total Revenue | $ 9,067 | $ 15,279 | $ 18,916 | $ 31,658 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Accounts receivable, net | $ 8,420 | $ 9,640 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of warrants (Detail) - Private Placement Warrants - Level 3 [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Class of Warrant or Right [Line Items] | ||||
Fair value as of beginning | $ 1,128 | $ 3,195 | $ 939 | $ 4,070 |
Change in value | (308) | 2,092 | (119) | 1,217 |
Fair value as of ending | $ 820 | $ 5,287 | $ 820 | $ 5,287 |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities - Additional Information (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Fees and expenses | $ 550,000 |
Capital Stock - Additional Info
Capital Stock - Additional Information (Details) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Class of Stock [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 11.50 | $ 11.50 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Private Placement Warrants | ||
Class of Stock [Line Items] | ||
Warrants and Rights Outstanding | 12,780,000 | 12,780,000 |
Public Warrants | ||
Class of Stock [Line Items] | ||
Warrants and Rights Outstanding | 21,350,000 | 21,350,000 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share based compensation expense | $ 2,129 | $ 3,839 | $ 4,432 | $ 6,207 |
Research and Development, net | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share based compensation expense | 546 | 662 | 1,220 | 1,208 |
Clinical Operations | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share based compensation expense | 126 | 79 | 246 | 201 |
Sales and Marketing | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share based compensation expense | 445 | 816 | 836 | 1,593 |
General and Administrative | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share based compensation expense | $ 1,012 | $ 2,282 | $ 2,130 | $ 3,205 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Computation of Basic and Diluted Net Income (Loss) Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||||
Net loss | $ (4,704) | $ (8,758) | $ (23,022) | $ (20,360) | $ (13,462) | $ (43,382) |
Denominator: | ||||||
Weighted average number of common shares used in computing basic net loss per share | 164,195,697 | 155,709,901 | 163,003,363 | 154,901,165 | ||
Weighted average number of common shares used in computing diluted net loss per share | 164,195,697 | 155,709,901 | 163,003,363 | 154,901,165 | ||
Net loss per share: Basic | $ (0.03) | $ (0.15) | $ (0.08) | $ (0.28) | ||
Net loss per share: Diluted | $ (0.03) | $ (0.15) | $ (0.08) | $ (0.28) |
Net Loss Per Share - Additional
Net Loss Per Share - Additional Information (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 10,179,411 | 6,360,148 | 10,179,411 | 6,360,148 |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 12,365,441 | 18,042,701 | 12,365,441 | 18,042,701 |
Private Placement Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 12,780,000 | 12,780,000 | 12,780,000 | 12,780,000 |
Public Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 21,350,000 | 21,350,000 | 21,350,000 | 21,350,000 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of accrued expenses and other current liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Accrued Expense and Other Current Liabilities [Abstract] | ||
User acquisition | $ 1,913 | $ 2,256 |
Employee compensation | 3,821 | 5,290 |
Litigation costs | 750 | 5,500 |
Professional fees | 576 | 543 |
Other | 3,384 | 2,913 |
Accrued expenses and other current liabilities | $ 10,444 | $ 16,502 |
Variable Interest Entities - Su
Variable Interest Entities - Summary of assets and liabilities of the Company's consolidated VIE (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 126,104 | $ 138,545 |
Accounts receivable | 8,420 | 9,640 |
Total assets | 140,521 | 156,254 |
LIABILITIES | ||
Accrued expenses and other current liabilities | 10,444 | 16,502 |
Variable Interest Entity [Member] | ||
ASSETS | ||
Cash and cash equivalents | 497 | 883 |
Accounts receivable | 6,159 | 1,716 |
Other assets | 0 | 4,813 |
Total assets | 6,656 | 7,412 |
LIABILITIES | ||
Accrued expenses and other current liabilities | 3,802 | 3,758 |
Total Liabilities | $ 3,802 | $ 3,758 |